EFTA01087638.pdf

J.P. Morgan North America Equity Research 01 October 2015 Overweight Bristol-Myers Squibb Company BMY. SPAY US Price: S59.20 Opdivo/ Yervoy approval an incremental positive - 30 September 2015 ALERT This morning, the FDA announced that it has approved Bristol's Opdivo Pharmaceuticals — Major & (PD-1) in combination with Yervoy (CTLA4) for previously untreated Specialty BRAF wild-type melanoma patients. This approval follows the Chris Schott, CFA AC presentation of the -067 (Phase III) study that confirmed the results from the -069 (Phase II) trial, which was the basis of this filing. Overall, Bloomberg .1.'`.1A SCHOTT <GO, Opdivo/ Yervoy is the first I/O combo to be approved and given the risk/benefit profile we see a clear role for this combo in the frontline setting. Along these lines, we see this approval stabilizing Yervoy sales, which have been declining over the past few quarters. Reiterate OW. Wendy L Lin • Opdivo/Yervoy approved for frontline BRAF wild-type melanoma. The FDA approved the Opdivo/Yervoy combo for use in patients that Dana Flanders, CFA have not been previously treated for metastatic melanoma. Although the approval is based on results from a Phase II trial, recently a Phase III M. Masan Secur __C (Checkmate-067) study confirmed Opdivo/Yervoy combos —15% improvement in ORR relative to Opdivo monotherapy. While this is a small indication, it represents the approval of the first I/O combo and we see the experience with the Opdivo/Yervoy combo will be important for refining treatment with I/O combos in different tumor types. • We see a role for the Opdivo/ Yervoy in frontline as the additional tox appears to be manageable. Despite higher frequency of grade 3/4 events and treatment discontinuations relative to Opdivo and Yervoy monotherapy, the toxicity generally appeared to be manageable when established safety guidelines were followed. In our view, the risk-benefit •, profile of Opdivo/ Yervoy combination appears to justify the combo for frontline therapy in patients able to tolerate the additional toxicity. • Up Next: Multiple novel 1O agents/combinations expected to enter the clinic in 2016. In addition to watching for Opdivo trends and monotherapy data in additional tumor types such as frontline NSCLC, glioblastoma and liquid tumors, BMY expects to present clinical data from the second-generation I/O agents such as CD137, KIR and LAG-3 in 2016. In addition, multiple novel agents such as IDO, OX40 and CD73 both a single agents/ in combinations are also expected to enter the clinic by 2016. See page 2 for analyst certification and important disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in malting their investment decision. www.jpmorganmarkets.com t is being provided for the exclusive use of LAUREN ZAKARIAN-COGSWELL at JPMorgan Chase a Co elltrIS J.P. r!,!cygari EFTA01087638  Chas Schott. CFA North America Equity Research 01 October 2015 J.P.Morgan Analyst Certification: The research analyst(s) denoted by an "AC— on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an "AC— on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that (I ) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or intervention. Important Disclosures • Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Bristol-Myers Squibb Company within the past 12 months. • Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Bristol-Myers Squibb Company. • Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment banking clients: Bristol-Myers Squibb Company. • Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-relate& Bristol-Myers Squibb Company. • Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-securities-related: Bristol-Myers Squibb Company. • Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation from investment banking Bristol- Myers Squibb Company. • Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking services in the next three months from Bristol-Myers Squibb Company. • Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from Bristol-Myers Squibb Company. Company-Specific Disclosures: Important disclosures, including price charts and credit opinion history tables, are available for compendia 'es by visiting littnor/ipinm.com/researchtdisclosures, calling or e-mailin ith your request. J.P. Morgan's Strategy, Technical, and Qu h teams may screen companies not covere y Morgan. For important disclosures for these companies, please call - ilitrer t ma Date Rating Share Price Price Target Bristol-Myers Squibb Company (itmv. Mir US) Price Chart 15) (5) 128 24 Jun-08 N 20.23 -- 06-Jan-09 N 23.23 23.00 105 — 19-Oct-09 N 22.97 25.00 N 528 OW Se6 05-Jan-10 N 25.23 26.00 18-Oct-10 N 27.33 27.00 84 — ll 27-Jan-11 N 25.79 31.00 N N 23 N 525 N N$31 N 533 N 535 OW $54 OW OVI5 25-Mar-11 N 26.43 32.00 Price(5) 63 - 26-Sep-11 N 30.94 33.00 04-Jun-12 N 33.66 35.00 42 — 25-Jul-12 N 34.95 38.00 03-Jun-13 N 46.01 48.00 21 — 25-Jul-13 N 44.59 50.00 16-Sep-13 OW 43.56 52.00 23-Oct-13 OW 49.73 54.00 0 I I I I 19-Dec-13 OW 53.84 60.00 oct Apr Oct Apr Oct Apr Oct 06 08 09 11 12 14 10-Oct-14 OW 50.28 63.00 03-Nov-14 OW 57.80 66.00 Sows. Ecoondatto and JP. Montauk pia data a(mits-CI for stock splits and dMdendf. Break at coveted* Jun 242008 . Jan 06. 2009. 20-Jan-15 OW 62.45 70.00 05-Mar-15 OW 66.05 75.00 2 This document is being provided for the exclusive use of LAUREN ZAKARIAN-COGSWELL at JPMorgan Chase & Co. and clients of M. Morgan. EFTA01087639  Chris Schott. CFA North America Equity Research 01 October 2015 J.P.Morgan 30-Sep-15 OW 59.20 78.00 The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings or designations: OW - Overweight, N- Neutral, UW Underweight, NR Not Rated Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight (Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Neutral (Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Underweight (Over the next six to twelve months, we expect this stock will underperfonn the average total return of the stocks in the analyst's (or the analyst's team's) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stock's expected total return is compared to the expected total return of a benchmark country market index, not to those analysts' coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst's coverage universe can be found on J.P. Morgan's research website, wmAv.jpmorganinarkets.com. Coverage Universe: Schott, Christopher: AbbVie (ABBV), Allergan plc (AGN), Bristol-Myers Squibb Company (BMY), Coherus (CHRS), Eli Lilly & Company (LLY), Endo International PLC (ENDP), Impax Laboratories (1PXL), Kythera Biopharmaceuticals (KYTFI), Mallinckrodt (MNK), Merck & Co., Inc. (MRK), Mylan Inc. (MYL), Perrigo Company (PRGO), Pfizer Inc. (PFE), Sagent Pharmaceuticals (SGNT), Teva Pharmaceuticals (TEVA), Valeant Pharmaceuticals (VRX), Zoetis (ZTS) J.P. Morgan Equity Research Ratings Distribution, as of September 30, 2015 Overweight Neutral Underweight (hold) J.P. Morgan Cilobal Equity Research Coverage 45% 43% 12% IB 52% 49% 35% JPMS Equity Research Coverage 45% 4T/. 8% IB 69% 66% 54% 'Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category: and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation arc not included in the table above. Equity Valuation and Risks: For valuation methodology and risks "conciated with covered companies or price targets for covered companies, please see the most recent company-specific research report at httplAvww)pmorganinarkets.com contact the primary analyst or your J.P. 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